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Ernest Addison

The Bank of Ghana (BoG) has through a
receivership process
been able to recover GH¢731 million out of a total of GH¢10.1 billion that was
advanced to customers of banks affected by the clean up in the banking sector.

The process has however been
undermined by individuals that frustrate loan recovery process through court
actions, fictitious acquisition of loan and poor documentation on loan
transactions, which make it difficult to identify and pursue loan defaulters.

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Dr Ernest Addison, Governor of BoG,
made this known when he addressed heads of businesses in the private sector at
the 4th edition of the CEO Summit held yesterday in Accra.

He disclosed that recoveries were made
through loan repayment by customers, sale of vehicles and liquidation of bonds,
among others.

In order to improve the rate of
recovery, he said that the receivers have fully engaged the judicial system to
assist in the recovery of assets from shareholders, directors and other loan
defaulters.

“There are about 50 cases currently
pending before our courts. Recovery process has not been without challenges
with individuals involved resorting to court system to frustrate the process.

 “Investigation so far has also revealed that
some assets were not registered in the names of specific financial institutions
but in the names of connected parties, making it difficult to disclose the
underline collateral to offset the outstanding loans,” he said.

The Market Place Lending (MPL), he said,
was of serious concern to BoG, as it posed a high risk.

The governor said the high MPL ratio,
which was 18.7 per cent as of the end of March 2019, must be tackled.

He said that the high MPL ratio has
implication for monetary policy conduct as it impedes the monetary transmission
mechanism.

“This level, by all measures, is not
acceptable and more work needs to be done in this area. As you are aware we
have been trying to lower the policy rate but we are not seeing the
transmission of lower policy rate in the lending rates to banks primarily
because of the high non performing loans in the system,” he said.

He advocated the designation of
special courts and judges to adjudicate issues arising out of the bank
resolutions, revocation of licences, as well as cases related to collateral
foreclosure.

The BoG, over the past two years, has
implemented some reforms to address weakness in banks and lapses in governance
where systemic nature of infractions had put depositors’ funds at risk and
affected public trust in the financial sector.

Initiatives adopted by the Central Bank include revising Risk Base Supervision Framework, issuing directives on banks to clean up their books, enforcement of directives on banks to write off their loans and appropriate disclosure of written off facilities in published financial statements.

By Issah Mohammed

The post Receivers Recover GH¢731m Loans appeared first on DailyGuide Network.

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